The Innovator and the Inhibitor

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on
01 Feb 2012

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Two little girls, Holly and Ivy, start lemonade stands in their neighborhoods one summer. Each has about the same foot traffic and each begins by selling lemonade at 25 cents. They do this for several days and, to their surprise they’re making more than $20 a day with their lemonade enterprise. Wow!

Other kids in the neighborhood hear about how much money Holly and Ivy have been making and decide to open their own lemonade stands…and this is where things start to diverge. Holly and Ivy’s next door neighbors both open their own lemonade stands and sell lemonade for the same price as Holly and Ivy. With the new competition, that day Holly and Ivy each only make $10.

Ivy spends the evening thinking about the new competition, and resolves that she will just have to make her lemonade stand the best one it can be. The next day she offers pink lemonade and real lemon wedges to her customers. This, along with the fact that her neighbors have been buying from her for days already and she makes $18 that day. As it turns out, she’s particularly adept at making pink lemonade (even better than classic) and it’s a huge hit. The next day she finds herself swamped with business because her neighbors all told each other how delicious the pink lemonade Ivy makes is. She makes $30 in one day, a new record!

Holly spends the evening talking to her mother, who is very well connected in the neighborhood. She tells her mother that it’s not fair that Billy next door opened a lemonade stand because she had the idea first. Holly’s mom calls Billy’s mom and asks her to tell Billy not to sell lemonade anymore. Billy’s mom, a bit confused, agrees because she doesn’t really want to have to buy lemons anyway. The next day Holly is once again the only lemonade stand in the neighborhood and is back to making $20 a day. Life is good.

Ivy is so successful with her pink lemonade that her neighbor copies her recipe and, in addition, three more people open lemonade stands in the same neighborhood. “Wow,” she thinks, “I’m going to have to really do a good job to keep all of my customers with all this competition.” So she tries lots of ideas: she starts selling cookies along with the lemonade, she hand-draws little cards that give someone a free lemonade for buying five and uses her mom’s hole-punch to keep track. She’s a friendly little girl and while the other kids in the neighborhood are making a little bit of money selling lemonade (and copying her every move), Ivy’s house has become something of a neighborhood gathering point. People come just to stand and talk about the day, all the while buying cookies and lemonade. It gets so popular that Ivy has to enlist some of the other neighborhood children to help her make enough lemonade and cookies to satisfy demand. Ivy is now making more than $100 a day, and three other kids in the neighborhood are making $30 a day helping her.

Other kids keep opening lemonade stands in Holly’s neighborhood too, but each time she tells her mother that it isn’t fair and her well-connected but a bit overprotective mother dutifully calls and asks the parents of the other children not to sell lemonade: that’s Holly’s thing. The other parents are starting to grumble a bit…Holly’s mom has been a good friend but isn’t it a little ridiculous that their children can’t sell lemonade just because Holly is stamping her feet and throwing a tantrum? Holly’s sales begin to dip as the parents (who are also Holly’s customers) get fed up with this entitled little girl.

As the weather cools from the hottest part of summer, the demand for lemonade starts dropping. Ivy has proven herself a consummate innovator and begins offering coffee and hot chocolate in addition to her cold beverages. Holly gets angrier and angrier that her profits are dipping and now her mother is calling in favors with neighbors to get them to come buy Holly’s lemonade. This can only go so far, and Holly’s sales dwindle down to almost nothing. Now she just asks her mother to pay her $20 a day directly to buy lemonade because it’s not fair that people don’t want to buy it anymore. Her mother, finally fed up, says “Holly it’s November, no one wants to buy lemonade. Go find another game to play.” Holly is shocked at the audacity of her mother’s statement and stamps off to her room, throwing herself on her bed and locking the door. Holly’s mother feels a fleeting moment of guilt for being hard on her daughter, but is more relieved just to have some peace and quiet around the house for once.